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No. 15-10627
IN THE UNITED STATES COURT OF APPEALSFOR THE ELEVENTH CIRCUIT
MARRIOTT OWNERSHIP RESORTS, INC.; MARRIOTTVACATIONS WORLDWIDE CORPORATION; MARRIOTT
RESORTS, TRAVEL COMPANY, INC.; MARRIOTT RESORTSHOSPITALITY CORPORATION,
Plaintiffs-Appellants,
– v. –
WILLIAM B. STERMAN,
Defendant-Appellee.
On Appeal from a Judgment and Order of theUnited States District Court for the Middle District of Florida
Case No. 6:14-cv-01400 (Mendoza, J.)
BRIEF OF THE CHAMBER OF COMMERCE OF THEUNITED STATES OF AMERICA AS AMICUS CURIAE IN
SUPPORT OF PLAINTIFFS-APPELLANTS
Kate Comerford ToddWarren PostmanU.S. CHAMBER LITIGATION
CENTER, INC.1615 H Street, N.W.Washington, DC 20062(202) 463-5337
Evan M. TagerArchis A. ParasharamiDaniel E. JonesMAYER BROWN LLP1999 K Street, N.W.Washington, DC 20006(202) 263-3000
Counsel for Amicus Curiae the Chamber of Commerce of theUnited States of America
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C-1 of 1
No. 15-10627
MARRIOTT OWNERSHIP RESORTS, INC., et al. v. STERMAN
___________________
CORPORATE DISCLOSURE STATEMENT
The Chamber of Commerce of the United States of America is a
non-profit corporation organized under the laws of the District of
Columbia. It has no parent corporation. No publicly held corporation
owns ten percent or more of its stock.
CERTIFICATE OF INTERESTED PERSONS
In addition to the persons previously identified as having an
interest in the outcome of this appeal, the Chamber of Commerce of the
United States of America identifies the following individuals:
Kate Comerford Todd
Warren Postman
Evan M. Tager
Archis A. Parasharami
Daniel E. Jones
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TABLE OF CONTENTS
Page
i
TABLE OF CITATIONS ..........................................................................ii
INTEREST OF THE AMICUS CURIAE ................................................. 1
STATEMENT OF THE ISSUES.............................................................. 3
INTRODUCTION AND SUMMARY OF ARGUMENT .......................... 3
ARGUMENT ............................................................................................ 7
I. THE AVAILABILITY OF CLASSWIDE ARBITRATION IS AQUESTION FOR COURTS, NOT ARBITRATORS, TODECIDE........................................................................................... 7
A. Gateway Questions Of Arbitrability Are PresumptivelyFor The Courts To Decide ...................................................... 7
B. The Availability Of Class Arbitration Is A GatewayQuestion Of Arbitrability..................................................... 10
II. A STANDARD PROVISION INCORPORATING THE AAA’SCOMMERCIAL ARBITRATION RULES IS NOT A “CLEARAND UNMISTAKABLE” DELEGATION TO THEARBITRATOR OF THE QUESTION WHETHER CLASSARBITRATION IS AVAILABLE .................................................. 19
CONCLUSION ....................................................................................... 28
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TABLE OF CITATIONS
Page(s)
ii
CASES
Am. Pipe & Constr. Co. v. Utah,414 U.S. 538 (1974).............................................................................14
Apollo Computer, Inc. v. Berg,886 F.2d 469 (1st Cir. 1989) ...............................................................21
AT&T Mobility LLC v. Concepcion,131 S. Ct. 1740 (2011)................................................................. passim
AT&T Techs., Inc. v. Commc’ns Workers of Am.,475 U.S. 643 (1986)........................................................................... 8, 9
BG Grp., PLC v. Republic of Argentina,134 S. Ct. 1198 (2014).........................................................................10
Chassen v. Fid. Nat’l Fin., Inc.,2014 WL 202763 (D.N.J. Jan. 17, 2014).............................................15
Chesapeake Appalachia, LLC v. Burkett,2014 WL 5312829 (M.D. Pa. Oct. 17, 2014) .......................................27
Chesapeake Appalachia, LLC v. Scout Petroleum, LLC,2014 WL 7335045 (M.D. Pa. Dec. 19, 2014)................................. 25, 26
Chesapeake Appalachia, LLC v. Suppa,2015 WL 966326 (N.D. W. Va. Mar. 4, 2015)............................. passim
Contec Corp. v. Remote Solution, Co.,398 F.3d 205 (2d Cir. 2005) ................................................................21
Corrigan v. Domestic Linen Supply Co.,2012 WL 2977262 (N.D. Ill. July 20, 2012) .................................. 16, 25
Eshagh v. Terminix Int’l Co.,2012 WL 1669416 (N.D. Cal. May 11, 2012)................................ 16, 25
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TABLE OF CITATIONS(continued)
Page(s)
iii
Eshagh v. Terminix Int’l Co.,588 F. App’x 703 (9th Cir. Dec. 22, 2014)...........................................15
Fallo v. High-Tech Inst.,559 F.3d 874 (8th Cir. 2009)...............................................................21
First Options of Chi. v. Kaplan,514 U.S. 938 (1995)................................................................... 9, 10, 20
Granite Rock Co. v. Int’l Bhd. of Teamsters,561 U.S. 287 (2010)...............................................................................8
Green Tree Fin. Corp. v. Bazzle,539 U.S. 444 (2003)....................................................................... 12, 16
Howsam v. Dean Witter Reynolds, Inc.,537 U.S. 79 (2002)....................................................................... passim
Huffman v. Hilltop Cos.,747 F.3d 391 (6th Cir. 2014)......................................................... 15, 24
John Wiley & Sons, Inc. v. Livingston,376 U.S. 543 (1964)...............................................................................9
Reed Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett,734 F.3d 594 (6th Cir. 2013)....................................................... passim
Lopez v. Ace Cash Express, Inc.,2012 WL 1655720 (C.D. Cal. May 4, 2012) ........................................27
Opalinski v. Robert Half Int’l, Inc.,2012 WL 6026674 (D.N.J. Dec. 3, 2012).............................................24
Opalinski v. Robert Half Int’l, Inc.,761 F.3d 326 (3d Cir. 2014) ........................................................ passim
Oracle Am., Inc. v. Myriad Grp. A.G.,724 F.3d 1069 (9th Cir. 2013).............................................................21
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TABLE OF CITATIONS(continued)
Page(s)
iv
Oxford Health Plans LLC v. Sutter,133 S. Ct. 2064 (2013)................................................................. passim
Price v. NCR Corp.,908 F. Supp. 2d 935 (N.D. Ill. 2012)...................................................28
Qualcomm Inc. v. Nokia Corp.,466 F.3d 1366 (Fed. Cir. 2006) ...........................................................21
Reed v. Fla. Metro. Univ., Inc.,681 F.3d 630 (5th Cir. 2012)...............................................................27
Rent-A-Center, West, Inc. v. Jackson,561 U.S. 63 (2010)......................................................................... 20, 28
Riley Mfg. Co. v. Anchor Glass Container Corp.,157 F.3d 775 (10th Cir. 1998).............................................................21
S. Commc’ns Servs., Inc. v. Thomas,720 F.3d 1352 (11th Cir. 2013)...........................................................17
Safra Nat’l Bank of N.Y. v. Penfold Inv. Trading, Ltd.,2011 WL 1672467 (S.D.N.Y. Apr. 20, 2011).......................................16
Stolt-Nielsen, S.A. v. AnimalFeeds International Corp.,559 U.S. 662 (2010)..................................................................... passim
Terminix Int’l Co. v. Palmer Ranch L.P.,432 F.3d 1327 (11th Cir. 2005)............................................... 20, 21, 22
Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford JuniorUniv.,489 U.S. 468 (1989)...............................................................................7
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TABLE OF CITATIONS(continued)
Page(s)
v
RULES
American Arbitration Association Commercial ArbitrationRules and Mediation Procedures
Rule 7.................................................................................. 21, 25, 28
American Arbitration Association Supplementary Rules forClass Arbitrations
Rule 1..............................................................................................28
Rule 3........................................................................................ 19, 27
Fed. R. App. P. 29(c)(5)..............................................................................1
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1
INTEREST OF THE AMICUS CURIAE
The Chamber of Commerce of the United States of America is the
world’s largest business federation. The Chamber represents 300,000
direct members and indirectly represents the interests of more than
three million companies and professional organizations of every size, in
every industry sector, and from every region of the country.1
The Chamber represents the interests of its members in matters
before the courts, Congress, and the Executive Branch. To that end, the
Chamber regularly files amicus curiae briefs in cases that raise issues
of vital concern to the Nation’s business community, including cases
addressing the enforceability and interpretation of arbitration
agreements.
Many of the Chamber’s members and affiliates employ arbitration
agreements in their contracts. Arbitration allows them to resolve
disputes promptly and efficiently while avoiding the costs associated
with traditional litigation. The type of arbitration contemplated by the
1 Pursuant to Federal Rule of Appellate Procedure 29(c)(5), amicusaffirms that no counsel for a party authored this brief in whole or inpart and that no person other than amicus, its members, or its counselhas made any monetary contributions intended to fund the preparationor submission of this brief. All parties have consented to the filing ofthis brief.
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2
Federal Arbitration Act (“FAA”) is speedy, fair, inexpensive, and less
adversarial than litigation in court—in part because “arbitration as
envisioned by the FAA” takes place on an individual rather than class-
wide basis. AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1753
(2011). The Chamber’s members have therefore structured millions of
contractual relationships around arbitration agreements.
Class arbitration is a worst-of-all-worlds Frankenstein’s monster:
It combines the enormous stakes, formality and expense of litigation
that are inimical to bilateral arbitration with exceedingly limited
judicial review of the arbitrators’ decisions. It is for that reason that
“[r]equiring the availability of classwide arbitration interferes with
fundamental attributes of arbitration and thus creates a scheme
inconsistent with the FAA.” Id. at 1748.
Accordingly, whether parties to an arbitration agreement
intended to depart from traditional arbitration procedures and instead
authorize class arbitration is a fundamental, threshold question of
monumental importance that, like other gateway questions of
arbitrability, is one that parties expect will be decided by a court rather
than an arbitrator. Yet the decision below turns this expectation on its
head, concluding that any time parties agree to use the standard
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3
commercial arbitration rules of the nation’s most popular arbitration
administrator, they are clearly and unmistakably delegating the
exceptionally important question of the availability of class arbitration
to arbitrators rather than courts. The Chamber has a strong interest in
explicating the errors in that approach.
STATEMENT OF THE ISSUES
1. Whether, in light of the Supreme Court’s repeated
recognition of the “fundamental” differences between bilateral and class
arbitration, the availability of class arbitration is a “gateway” question
that is presumptively for courts, not arbitrators, to decide.
2. Whether an agreement that nowhere mentions class
arbitration and merely designates the commercial arbitration rules of
the American Arbitration Association amounts to a clear and
unmistakable delegation to the arbitrators to decide the availability of
class arbitration.
INTRODUCTION AND SUMMARY OF ARGUMENT
Who decides—a court or an arbitrator—whether an arbitration
provision authorizes class-wide arbitration?
This question is of considerable practical significance to
businesses across the country. As the Supreme Court has observed,
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4
class arbitration is “not arbitration as envisioned by the FAA” and
“lacks its benefits.” AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740,
1753 (2011). Rather, class arbitration is an unwieldy hybrid proceeding
that sacrifices the informality and expediency of traditional arbitration
in favor of the procedural complexity and bet-the-company stakes of
class litigation.
I. The Supreme Court has explained that certain fundamental
issues concerning an arbitration agreement are “gateway question[s]”
that are reserved for courts to decide absent a “clear[] and
unmistakabl[e]” agreement to the contrary. Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79, 83–84 (2002) (quotation marks omitted).
Whether an arbitration agreement authorizes class-wide arbitration is
a quintessential “gateway question” that goes to the heart of what and
with whom the parties have agreed to arbitrate and that contracting
parties would expect to be answered by a court.
While neither the Supreme Court nor this Court has squarely
decided whether the availability of class-wide arbitration is a gateway
issue of arbitrability, the Supreme Court has “given every indication,
short of an outright holding, that classwide arbitrability is a gateway
question rather than a subsidiary one.” Reed Elsevier, Inc. ex rel.
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5
LexisNexis Div. v. Crockett, 734 F.3d 594, 598 (6th Cir. 2013), cert.
denied, 134 S. Ct. 2291 (2014). In particular, in Stolt-Nielsen, S.A. v.
AnimalFeeds International Corp., 559 U.S. 662 (2010), the Court
strongly suggested that the issue is a gateway question of arbitrability,
but was not required to reach the issue because the parties in that case
had stipulated that the question was for the arbitrator to decide. See
id. at 680, 685–87. Similarly, in Oxford Health Plans LLC v. Sutter,
133 S. Ct. 2064 (2013), the Court again declined to reach the issue, but
made clear that “Stolt-Nielsen flagged that it might be a question of
arbitrability.” Id. at 2068 n.2.
It is thus unsurprising that the only two circuits to have
addressed the issue in the wake of Stolt-Nielsen and Oxford Health
Plans have held that the availability of class-wide arbitration is
presumptively for courts to decide. See Opalinski v. Robert Half Int’l,
Inc., 761 F.3d 326 (3d Cir. 2014), cert. denied, 2015 WL 998611 (U.S.
Mar. 9, 2015); Reed Elsevier, 734 F.3d 594. As the Sixth Circuit
observed, because “[a]n incorrect answer in favor of classwide
arbitration would force parties to arbitrate not merely a single matter
that they may well not have agreed to arbitrate, but thousands of
them,” the decision “whether the parties agreed to classwide arbitration
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6
is vastly more consequential than even the gateway question whether
they agreed to arbitrate” at all. Reed Elsevier, 734 F.3d at 599 (citation,
alterations, and quotation marks omitted).
II. The court below held that the parties had clearly and
unmistakably delegated the question of class arbitration to the
arbitrator by referring to the Commercial Arbitration Rules of the
American Arbitration Association (“AAA”) in their arbitration
agreement. But a mere reference to an arbitration provider’s rules—
ones that do not mention class arbitration procedures at all—falls far
short of satisfying the Supreme Court’s “clear and unmistakable”
standard, which is meant to prevent courts from “forcing parties to
arbitrate a matter that they may well not have agreed to arbitrate.”
Howsam, 537 U.S. at 84.
Indeed, that standard is an especially demanding one in the
context of class arbitration. The Supreme Court has held that an
arbitration provision must reflect the parties’ actual agreement to
authorize class procedures before such procedures may be imposed upon
an unwilling party. The same principle holds for the threshold question
of “who decides” whether class procedures are available. And for that
reason, one court after another has properly concluded that adopting
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7
the AAA’s Commercial Arbitration Rules falls far short of the “clear and
unmistakable” agreement needed to remove this crucial determination
from the hands of courts and delegate it to an arbitrator.
ARGUMENT
I. THE AVAILABILITY OF CLASSWIDE ARBITRATION IS AQUESTION FOR COURTS, NOT ARBITRATORS, TODECIDE
A. Gateway Questions Of Arbitrability ArePresumptively For The Courts To Decide.
The ability of parties to structure their arbitration agreements is a
core aspect of the FAA’s pro-arbitration policies. The FAA “imposes
certain rules of fundamental importance, including the basic precept
that arbitration ‘is a matter of consent, not coercion.” Stolt-Nielsen, 559
U.S. at 680 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland
Stanford Junior Univ., 489 U.S. 468, 479 (1989)). As the Supreme
Court has repeatedly explained, a “party cannot be required to submit
to arbitration any dispute which he has not agreed so to submit.”
Howsam, 537 U.S. at 83 (quotation marks omitted). For that reason,
“parties may agree to limit the issues subject to arbitration” as well as
“to limit with whom a party will arbitrate its disputes.” Concepcion,
131 S. Ct. at 1748–49.
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8
Accordingly, an arbitrator has authority to decide a particular
question only if the parties have authorized him or her to do so. See,
e.g., Stolt-Nielsen, 559 U.S. at 682 (“[A]n arbitrator derives his or her
powers from the parties’ agreement to forgo the legal process and
submit their disputes to private dispute resolution.”); AT&T Techs., Inc.
v. Commc’ns Workers of Am., 475 U.S. 643, 648–49 (1986)
(“[A]rbitrators derive their authority to resolve disputes only because
the parties have agreed in advance to submit such grievances to
arbitration.”).
In keeping with these principles, the Supreme Court has
recognized that “gateway question[s]” of “arbitrability”—i.e., “whether
the parties have submitted a particular dispute to arbitration”—are
presumptively for the courts, not arbitrators, to decide. Howsam, 537
U.S. at 83–84 (quotation marks omitted). Such gateway questions
include, but are not limited to, “whether parties have a valid arbitration
agreement at all” (Oxford Health Plans, 133 S. Ct at 2068 n.2) and
“whether an arbitration clause in a concededly binding contract applies
to a particular type of controversy” (Howsam, 537 U.S. at 84).2
2 See also, e.g., Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S.287, 299–300 (2010) (disputes over “formation of the parties’ arbitration
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9
What these issues have in common is that “contracting parties
would likely have expected a court” to decide them. Howsam, 537 U.S.
at 83. That is because their resolution goes to the heart of the arbitral
bargain, shaping the very nature of the dispute or disputes that the
parties have agreed to submit to the arbitrators for decision. Farming
out these gateway questions to the arbitrators would therefore “risk
* * * forcing parties to arbitrate a matter that they may well not have
agreed to arbitrate.” Id. at 83–84. Moreover, because the FAA imposes
a default rule that such issues are “for judicial determination,” parties
must “clearly and unmistakably provide otherwise” in order to contract
around that rule. Id. at 83 (quoting AT&T Techs., 475 U.S. at 649). As
the Supreme Court explained in First Options:
[G]iven the principle that a party can be forced toarbitrate only those issues it specifically hasagreed to submit to arbitration, one canunderstand why courts might hesitate tointerpret silence or ambiguity on the “who should
agreement” and “its enforceability or applicability to the dispute” areordinarily for the courts); First Options of Chi. v. Kaplan, 514 U.S. 938,943–47 (1995) (same for dispute over whether arbitration clause appliedto a party who “had not personally signed” the contract in which it wascontained); AT&T Techs., 475 U.S. at 651 (same for dispute overwhether particular labor-management layoff dispute fell within thearbitration clause in a collective bargaining agreement); John Wiley &Sons, Inc. v. Livingston, 376 U.S. 543, 546–48 (1964) (same for disputeover whether arbitration provision survived a corporate merger).
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10
decide arbitrability” point as giving thearbitrators that power, for doing so might toooften force unwilling parties to arbitrate a matterthey reasonably would have thought a judge, notan arbitrator, would decide.
514 U.S. at 945.
By contrast, when a court concludes that parties have agreed to
arbitrate a given dispute, but recognizes that there are potential
procedural obstacles to arbitration, such questions of “procedural
arbitrability” are presumptively for the arbitrator to decide. Howsam,
537 U.S. at 84. As the Supreme Court has recently summarized,
“[t]hese procedural matters include claims of waiver, delay, or a like
defense to arbitrability,” as well as “the satisfaction of prerequisites
such as time limits, notice, laches, estoppel, and other conditions
precedent to an obligation to arbitrate.” BG Grp., PLC v. Republic of
Argentina, 134 S. Ct. 1198, 1207 (2014) (quotation marks omitted).
B. The Availability Of Class Arbitration Is A GatewayQuestion Of Arbitrability.
The question whether class arbitration is available—namely,
whether parties have agreed to traditional, bilateral arbitration or have
instead agreed to arbitrate the claims of hundreds or thousands of
absent parties—is a decision of profound importance that parties would
expect a court to resolve, not a mere procedural detail. Indeed, the
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11
Supreme Court has made it clear that “class-action arbitration changes
the nature of arbitration to such a degree that it cannot be presumed
the parties consented to it by simply agreeing to submit their disputes
to an arbitrator.” Stolt-Nielsen, 559 U.S. at 685. Whether class
arbitration is available is about far more than “merely what ‘procedural
mode’ [is] available to present [a plaintiff’s] claims.” Id. at 687.
Specifically, the shift from bilateral to class-wide arbitration
results in several “fundamental changes” (id. at 686) that wreak havoc
on the type of arbitration that is contemplated by the FAA. To begin
with, “the switch from bilateral to class arbitration sacrifices the
principal advantage of arbitration—its informality—and makes the
process slower, more costly, and more likely to generate procedural
morass than final judgment.” Concepcion, 131 S. Ct. at 1751. Bilateral
arbitration is an attractive alternative to litigation precisely because, in
the ordinary course, it permits parties to trade the “procedural rigor
and appellate review of the courts in order to realize the benefits of
private dispute resolution,” including “lower costs” and “greater
efficiency and speed.” Stolt-Nielsen, 559 U.S. at 685; see also
Concepcion, 131 S. Ct. at 1751.
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12
Class arbitration, by contrast, “requires procedural formality.”
Concepcion, 131 S. Ct. at 1751. Before reaching the merits, the
arbitrator “must first decide, for example, whether the class itself may
be certified, whether the named parties are sufficiently representative
and typical, and how discovery for the class should be conducted.” Id.
Moreover, the delays inherent in class arbitration are undeniable: In
Concepcion, the Court cited statistics showing that class arbitrations
take years to resolve instead of months—and none of the hundreds of
class arbitrations discussed by the court ended with “a final award on
the merits.” Id.
In addition, class arbitration ratchets up the stakes of arbitration
and the risk to defendants of an adverse decision. The “commercial
stakes of class-action arbitration are comparable to those of class-action
litigation” because the arbitrator’s award “adjudicates the rights of
absent parties.” Stolt-Nielsen, 559 U.S. at 686. In a class arbitration
proceeding, all of the risk is packed into a single arbitrator’s (or panel’s)
decision and therefore “will often become unacceptable,” pressuring
defendants “into settling questionable claims.” Concepcion, 131 S. Ct.
at 1752; see also Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 459
(2003) (Rehnquist, C.J., dissenting) (observing that a class arbitration
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13
proceeding “concentrate[s] all of the risk of substantial damages awards
in the hands of a single arbitrator”).
What is more, it remains unsettled whether a class arbitration is
even capable of yielding a judgment binding on all parties. Even if the
arbitrator were to observe all of the procedural formalities required to
“bind absentees in litigation,” such as notice, an opportunity to be
heard, and the right to opt out (id. at 1751), absent class members
might argue that they are not bound by the arbitrator’s decision,
because, for example, their arbitration agreements do not authorize
class arbitration or they were not afforded their contractual right to
participate in the selection of the arbitrator. Justice Alito suggested as
much in his concurring opinion in Oxford Health Plans, arguing that,
“at least where absent class members have not been required to opt in,
it is difficult to see how an arbitrator’s decision to conduct class
proceedings could bind absent class members who have not authorized
the arbitrator to decide on a classwide basis which arbitration
procedures are to be used.” 133 S. Ct. at 2071–72 (Alito, J.,
concurring)). Consequently, absent class members might claim the
“‘benefit from a favorable judgment without subjecting themselves to
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14
the binding effect of an unfavorable one.’” Id. at 2072 (quoting Am. Pipe
& Constr. Co. v. Utah, 414 U.S. 538, 546–47 (1974)).
For these reasons, class arbitration is not “arbitration as
envisioned by the FAA” and “lacks its benefits.” Concepcion, 131 S. Ct.
1753. And because “[a]rbitration is poorly suited to the higher stakes of
class litigation” (id. at 1752) and arbitrators’ decisions on matters
within their authority are subject to limited review, parties should not
be compelled to submit the determination of such a fundamental
issue—whether class arbitration is available—to an arbitrator in the
absence of a clear and unmistakable agreement to do so.
In light of Stolt-Nielsen, Concepcion, and Oxford Health Plans, the
Third and Sixth Circuits—the only two federal appellate courts to have
squarely decided the issue—have held that the question whether an
arbitration provision authorizes class proceedings is a “gateway” issue
of arbitrability that ordinarily must be decided by a court. As the Third
Circuit put it, “[t]raditional individual arbitration and class arbitration
are so distinct that a choice between the two goes, we believe, to the
very type of controversy to be resolved.” Opalinski, 761 F.3d at 334
(emphasis added). The Sixth Circuit similarly has said that “whether
the parties arbitrate one claim or 1,000 in a single proceeding is no
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15
mere detail. * * * [T]he question whether the parties agreed to
classwide arbitration is vastly more consequential than even the
gateway question whether they agreed to arbitrate bilaterally.” Reed
Elsevier, 734 F.3d at 598–99; see also Huffman v. Hilltop Cos., 747 F.3d
391, 398–99 (6th Cir. 2014) (following Reed Elsevier).3 Numerous
district courts have reached the same conclusion.4
3 In a recent unpublished decision, the Ninth Circuit similarlyconcluded that a district court did not err in striking a plaintiff’s classclaims because “[i]ssues that contracting parties would likely haveexpected a court to have decided are considered gateway questions ofarbitrability for courts, and not arbitrators, to decide.” Eshagh v.Terminix Int’l Co., 588 F. App’x 703, 704 (9th Cir. Dec. 22, 2014)(quotation marks omitted).
4 See, e.g., Chesapeake Appalachia, LLC v. Suppa, --- F. Supp. 3d ---,2015 WL 966326, at *8 (N.D. W. Va. Mar. 4, 2015) (noting that “classarbitration raises numerous and significant issues that are of lesserconcern in bilateral arbitration” and concluding, therefore, that “the lawprotects parties by presuming that a decision implicating suchconsequential matters should be litigated through the judicial processinstead of through arbitration”); Chassen v. Fid. Nat’l Fin., Inc., 2014WL 202763, at *5–6 (D.N.J. Jan. 17, 2014) (concluding “that the issue ofclass-wide arbitration is a gateway issue” because of the differencesbetween bilateral and class-wide arbitration); Safra Nat’l Bank of N.Y.v. Penfold Inv. Trading, Ltd., 2011 WL 1672467, at *3 (S.D.N.Y. Apr.20, 2011) (“[A]bsent an agreement to arbitrate on a class basis, theavailability of class arbitration is a gateway issue to be decided by thecourts.”); Corrigan v. Domestic Linen Supply Co., 2012 WL 2977262, at*4 (N.D. Ill. July 20, 2012) (“It is for courts, not arbitrators, to decidewhether class claims are able to proceed.”); Eshagh v. Terminix Int’lCo., 2012 WL 1669416, at *10 (N.D. Cal. May 11, 2012), findings andrecommendations adopted in full, Dkt. No. 63, No. 1:11-cv-00222 (E.D.
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16
The few courts that have taken a contrary view have principally
relied upon the non-binding plurality opinion in Green Tree Financial
Corp. v. Bazzle, 539 U.S. 444 (2003), in which four Justices opined that
the availability of class arbitration is merely a question of “arbitration
procedures” and not a gateway question of arbitrability. Id. at 452–53.
But the Supreme Court has subsequently cautioned that “Bazzle did not
yield a majority decision” on this question and expressed surprise that
the parties “appear[ed] to have believed that the judgment in Bazzle
requires an arbitrator, not a court, to decide whether a contract permits
class arbitration.” Stolt-Nielsen, 559 U.S. at 679–80. Dispelling any
doubts that may have lingered on that score, the Court recently
reiterated that “Stolt-Nielsen made clear that this Court has not yet
decided whether the availability of class arbitration is a question of
arbitrability.” Oxford Health Plans, 133 S. Ct. at 2068 n.2.
Accordingly, “who decides”—a court or an arbitrator—whether an
Cal. July 6, 2012), aff’d, 588 F. App’x 703 (rejecting plaintiff’s argumentthat “the question of whether he has a right to bring a class inarbitration is a question of procedural arbitrability for the arbitrator,not the Court”).
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arbitration agreement authorizes classwide arbitration is an open
question in the Supreme Court.5
That said, the Court has strongly signaled that the reasoning of
the Bazzle plurality is unlikely to survive, noting that the discussion in
“Stolt-Nielsen flagged that [the availability of class arbitration] might
be a question of arbitrability.” Oxford Health Plans, 133 S. Ct. at 2068
n.2. It appears that the only reason why the Supreme Court has not yet
issued such a holding is that—unlike here—the parties in Oxford
Health Plans and Stolt-Nielsen had consented to having the arbitrator
decide whether the arbitration agreement authorized class procedures.
See id.; Stolt-Nielsen, 559 U.S. at 680. Indeed, Justice Alito’s
concurrence in Oxford Health Plans warned that “in the absence of
concessions like Oxford’s,” the difficulty of binding absent class
members to an arbitrator’s decision “should give courts pause before
concluding that the availability of class arbitration is a question the
arbitrator should decide.” 133 S. Ct. at 2072 (Alito, J., concurring). As
5 It is an open question in this Court as well. See S. Commc’nsServs., Inc. v. Thomas, 720 F.3d 1352, 1358 n.6 (11th Cir. 2013) (“Likethe Supreme Court, we also have not decided whether the availability ofclass arbitration is a question of arbitrability.”). This Court did notneed to reach the issue in Thomas because—as in Oxford Health Plans,but unlike here—the parties did not dispute the arbitrator’s authorityto decide the class arbitration issue. Id.
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the Sixth Circuit summarized, “the [Supreme] Court has given every
indication, short of an outright holding, that classwide arbitrability is
a gateway question”—i.e., a question ordinarily reserved for courts—
“rather than a subsidiary one.” Reed Elsevier, 734 F.3d at 598
(emphasis added); see also Opalinski, 761 F.3d at 331 (“Subsequent
Supreme Court decisions * * * cast doubt on the Bazzle plurality’s
decision.”); Suppa, 2015 WL 966326, at *7 (“As both the Sixth and Third
Circuits have acknowledged, the Supreme Court’s post-Bazzle decisions
have gone beyond merely asserting that the ‘who decides’ question
remains unresolved.”).
Accordingly, there is good reason to think that the Supreme Court
would hold that the availability of class arbitration is a gateway
question of arbitrability. This Court should follow the clear indications
of the Supreme Court—and the decisions of the Third and Sixth
Circuits and numerous district courts—and hold that the availability of
classwide arbitration is a fundamental “gateway” issue for courts to
decide.
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II. A STANDARD PROVISION INCORPORATING THE AAA’SCOMMERCIAL ARBITRATION RULES IS NOT A “CLEARAND UNMISTAKABLE” DELEGATION TO THEARBITRATOR OF THE QUESTION WHETHER CLASSARBITRATION IS AVAILABLE
The court below declined to reach the issue of whether the
availability of class-wide arbitration is a gateway issue of arbitrability.
Instead, the court concluded that the arbitration provision’s statement
that disputes would be resolved “pursuant to . . . the then-current
commercial arbitration rules and supervision of the AAA” amounted to
a “clear and unmistakable delegation of authority to the arbitrator” to
decide the class arbitration issue. Order 8–9 (emphasis and ellipses in
original; alterations omitted). Although neither the arbitration
provision nor the AAA’s Commercial Rules mention class arbitration,
the district court concluded that the parties’ incorporation of those rules
further incorporated the separate AAA Supplementary Rules for Class
Arbitrations (“Supplementary Class Rules”), which (when applicable)
set forth procedures by which an arbitrator may determine “‘whether
the applicable arbitration clause permits the arbitration to proceed on
behalf of or against a class.’” Id. at 8 (quoting Supplementary Class
Rule 3).
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This daisy chain of incorporation falls far short of satisfying the
Supreme Court’s clear-and-unmistakable standard. As the Supreme
Court has explained, that standard is a “heightened” one (Rent-A-
Center, West, Inc. v. Jackson, 561 U.S. 63, 69 n.1 (2010)) that creates a
“strong pro-court presumption as to the parties’ likely intent” (Howsam,
537 U.S. at 86). Applying these principles, the Third Circuit has said
that “[t]he burden of overcoming the presumption is onerous, as it
requires express contractual language unambiguously delegating the
question of arbitrability to the arbitrator.” Opalinski, 761 F.3d at 335.
Unlike the ordinary presumption that any ambiguities in the
agreement should be construed in favor of arbitration, in this context
the presence of any “silence or ambiguity” defeats a claim that the issue
has been delegated to the arbitrator. First Options, 514 U.S. at 945.
This safeguard ensures that parties will not be forced “to arbitrate a
matter that they may well not have agreed to arbitrate.” Howsam, 537
U.S. at 84.
In concluding that the clear-and-unmistakable standard was met
here, the court below relied on Terminix International Co. v. Palmer
Ranch Limited Partnership, 432 F.3d 1327 (11th Cir. 2005), which held
that the parties’ incorporation of the AAA Commercial Arbitration
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Rules into their arbitration agreement amounted to an express
agreement to arbitrate arbitrability. Id. at 1332–33. The Court
reasoned that because what was then AAA Commercial Rule 8(a)—now
7(a)—grants an arbitrator the authority to rule on his own jurisdiction,
including the arbitrability of a given claim, the parties had agreed to let
the arbitrator decide any challenges to the validity of the arbitration
clause. Id.
But the Court in Terminix assessed whether the parties had
agreed to arbitrate arbitrability in the context of a bilateral arbitration
agreement and the AAA Commercial Rules, and thus had no occasion to
address the AAA Supplementary Class Rules or the possible delegation
of the class arbitration issue.6 This distinction is critical, given that the
Supreme Court and numerous appellate courts have recognized the
fundamental differences between bilateral and class arbitration. E.g.,
6 The same was true in the decisions of other circuits on which theCourt in Terminix relied. See Contec Corp. v. Remote Solution, Co., 398F.3d 205, 208 (2d Cir. 2005); Apollo Computer, Inc. v. Berg, 886 F.2d469, 473–74 (1st Cir. 1989); see also, e.g., Oracle Am., Inc. v. MyriadGrp. A.G., 724 F.3d 1069, 1074 (9th Cir. 2013); Fallo v. High-Tech Inst.,559 F.3d 874, 878 (8th Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466F.3d 1366, 1372–73 (Fed. Cir. 2006). But see Riley Mfg. Co. v. AnchorGlass Container Corp., 157 F.3d 775, 777 & n.1, 780 (10th Cir. 1998)(concluding that the parties did not specifically intend to submit thequestion of arbitrability to the arbitrator, even though the arbitrationclause incorporated the AAA Commercial Arbitration Rules).
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Concepcion, 131 S. Ct. at 1750–51; Stolt-Nielsen, 559 U.S. at 684–87;
Opalinski, 761 F.3d at 333–35; Reed Elsevier, 734 F.3d at 598–99.
Indeed, the Sixth Circuit has emphasized that, because of these
differences, “the question whether the parties agreed to classwide
arbitration is vastly more consequential than even the gateway
question whether they agreed to arbitrate bilaterally.” Reed Elsevier,
734 F.3d at 599 (emphasis added). After all, “[a]n incorrect answer in
favor of classwide arbitration would ‘forc[e] parties to arbitrate’ not
merely a single ‘matter that they may well not have agreed to
arbitrate[,]’ but thousands of them.” Id. (quoting Howsam, 537 U.S. at
84) (citation omitted; alterations in original).
In light of the substantial importance of the decision whether
class-wide arbitration is available, the district court’s extension of
Terminix to the circumstances presented here is unwarranted. Indeed,
there are at least four reasons why the district court erred in reading
Terminix as broadly it did.
First, the district court’s extension of Terminix is in considerable
tension with the Supreme Court’s recent arbitration decisions—
particularly Stolt-Nielsen. In Stolt-Nielsen, the Court held that neither
courts nor arbitrators may “presume that the parties’ mere silence on
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the issue of class-action arbitration constitutes consent to resolve their
disputes in class proceedings.” 559 U.S. at 687. Rather, there must be
“a contractual basis for concluding that the party agreed to do so.” Id.
at 684. It follows, therefore, that parties’ silence on the antecedent
“who decides” question cannot be construed as implicit—much less
“clear” and “unmistakable”—consent to submit the availability of class
arbitration to the arbitrator either. Yet deeming an unremarkable
reference to the AAA Commercial Rules—the most commonplace
arbitration rules in the United States—to be a clear and unmistakable
delegation of the class arbitrability issue would effectively do just that.
The recent decision in Chesapeake Appalachia, LLC v. Suppa, ---
F.3d ----, 2015 WL 966326 (N.D. W. Va. Mar. 4, 2015), captures the
problem with the district court’s reasoning in this case. The upshot of
such reasoning, that court explained, is that “parties could not agree
that the AAA rules would govern only bilateral arbitration unless they
specifically excluded the Supplementary Rules for Class Arbitrations.”
Id. at *10. Yet this would “turn[] the presumption favoring judicial
determination of classwide arbitrability on its head,” because the
“entire point of the presumption is that an arbitration clause need not
expressly exclude questions of arbitrability as outside its scope.” Id.
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Second, embracing the district court’s interpretation of Terminix
would put this Court in square conflict with the decisions of the Third
and Sixth Circuits, as well as several district courts. The arbitration
provision in this case is materially indistinguishable from the
arbitration provisions in Huffman, Reed Elsevier, and Opalinski, all of
which also called for arbitration under the AAA Commercial Arbitration
Rules. See Huffman, 747 F.3d at 394; Reed Elsevier, 734 F.3d at 599;
Opalinski v. Robert Half Int’l, Inc., 2012 WL 6026674, at *1 n.1 (D.N.J.
Dec. 3, 2012), rev’d, 761 F.3d 326. Yet the courts in those cases each
concluded that such language is insufficient to delegate the availability
of class arbitration to the arbitrator. As the Sixth Circuit reasoned,
such language “does not clearly and unmistakably assign to an
arbitrator the question whether the agreement permits classwide
arbitration”; “given the total absence of any reference to classwide
arbitration” in the arbitration agreement itself, the agreement “can just
as easily be read to speak only to issues related to bilateral arbitration.”
Reed Elsevier, 734 F.3d at 599. “Thus, at best, the agreement is silent
or ambiguous as to whether an arbitrator should determine the
question of classwide arbitrability; and that is not enough to wrest that
decision from the courts.” Id. (citing Stolt-Nielsen, 559 U.S. at 684–85).
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Similarly, the Third Circuit concluded that “the strong presumption
favoring judicial resolution of questions of arbitrability is not undone”
absent “express contractual language unambiguously delegating the
question of arbitrability to the arbitrator.” Opalinski, 761 F.3d at 335.7
Indeed, some courts have recognized a clear distinction between
agreeing to allow arbitrators to decide questions of arbitrability under
Commercial Rule 7 in general and agreeing to allow arbitrators to
decide the class arbitration issue under the Supplementary Class Rules
in particular. For instance, Judge Gettleman of the Northern District of
Illinois has concluded that the question whether a plaintiff’s individual
claims fell within the scope of the arbitration clause was a question for
the arbitrator in light of the parties’ incorporation of the Commercial
Rules. Corrigan v. Domestic Linen Supply Co., 2012 WL 2977262, at
*2–3 (N.D. Ill. July 20, 2012). But he further held that the availability
7 See also, e.g., Suppa, 2015 WL 966326, at *1, *10 (agreementcalling for arbitration “in accordance with the rules of the [AAA]” isinsufficient to delegate issue of class-wide arbitrability to thearbitrator); Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, --- F.Supp. 3d ----, 2014 WL 7335045, at *3, *12–13 (M.D. Pa. Dec. 19, 2014),appeal filed, No. 15-1275 (3d Cir. docketed Feb. 3, 2015) (same);Eshagh, 2012 WL 1669416, at *3, *10 (same for agreement calling forarbitration “in accordance with the Commercial Arbitration Rules thenin force of the [AAA],” “[g]iven the Supreme Court’s * * * determinationin Stolt-Nielsen that a party may not be compelled to submit a disputeto class arbitration where there is no agreement to do so”).
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of class arbitration remained for the court to decide, because the
agreement was “silent as to class arbitration.” Id. at *4–5 (citing Stolt-
Nielsen, 559 U.S. at 682–83). Similarly, Judge Brann of the Middle
District of Pennsylvania rejected as “unpersuasive” the proposal that a
court should “take a contract that clearly and unmistakably provides for
bilateral arbitration and the rules that will govern bilateral arbitration,
and extrapolate that evidence to ‘clearly and unmistakably provide’ for
class arbitration.” Chesapeake Appalachia, 2014 WL 7335045, at *13;
accord Suppa, 2015 WL 966326, at *9–10. As Judge Brann observed,
“[u]sing bilateral arbitration dispute case law to make a decision in a
classwide arbitration dispute case completely ignores the * * *
fundamental differences between classwide and individual arbitration.”
Chesapeake Appalachia, 2014 WL 7335045, at *12 (quotation marks
omitted).
Third, because the Commercial Rules nowhere mention class
arbitration or the Supplementary Class Rules, the district court was
forced to stretch mightily (and too far) in concluding that consent to use
the Commercial Rules amounts to an express incorporation of the
Supplementary Class Rules as well. The Commercial Rules do not
themselves refer to or incorporate the Supplementary Class Rules;
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indeed, they do not mention the notion of class arbitration at all. In
other words, to reach the conclusion that it did, the district court had to
infer that (1) the parties were aware of the existence of the
Supplementary Class Rules, even though they were not referenced in
either the agreement itself or the text of the Commercial Rules; (2) the
parties clearly intended the Supplementary Class Rules to apply to
their dispute, notwithstanding the agreement’s silence as to those rules;
and (3) in particular, the parties clearly intended to have
Supplementary Class Rule 3 divest courts of their jurisdiction to rule on
the availability of class-wide arbitration. This piling of inference upon
inference stretches the Supreme Court’s “clear and unmistakable”
requirement beyond recognition. See Lopez v. Ace Cash Express, Inc.,
2012 WL 1655720, at *8 (C.D. Cal. May 4, 2012) (deciding the
availability of class-wide arbitration because the parties’ express
incorporation of one set of AAA rules did not amount to an “express[]
incorporat[ion] [of] the Supplementary Rules”).8
8 To be sure, some courts have agreed with the district court that anincorporation of the Commercial Rules amounts to an expressincorporation of the Supplementary Rules as well. See, e.g., Reed v. Fla.Metro. Univ., Inc., 681 F.3d 630, 635 (5th Cir. 2012), abrogated on othergrounds by Oxford Health Plans, 133 S. Ct. 2064; ChesapeakeAppalachia, LLC v. Burkett, 2014 WL 5312829, at *7 (M.D. Pa. Oct. 17,
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Fourth, even if incorporation of the Commercial Rules were
deemed to further incorporate the Supplementary Class Rules as well,
the Supplementary Class Rules do not require that the issue of class
arbitrability be decided by the arbitrator. On the contrary, they
explicitly recognize that the decision may be made by a court instead.
Specifically, Supplementary Class Rule 1(c) contemplates that “a court”
may, “by order, address[] and resolve[] any matter that would otherwise
be decided by an arbitrator under these Supplementary Rules” and
requires the arbitrator in such circumstances to “follow the order of the
court.” AAA Supp. R–1(c). This language’s lack of certainty over who
decides the availability of class arbitration procedures stands in
contrast to Commercial Rule 7, which assigns to the arbitrator the
power “to rule on his or her own jurisdiction, including * * * the
arbitrability of any claim or counterclaim.” AAA Comm. R–7(a).
CONCLUSION
The district court’s judgment should be reversed.
2014); Price v. NCR Corp., 908 F. Supp. 2d 935, 945 (N.D. Ill. 2012).But none of those decisions is binding on this Court, and we respectfullysubmit that decisions such as Lopez better comport with the“heightened standard” (Rent-A-Center, 561 U.S. at 69 n.1) that theclear-and-unmistakable requirement is meant to impose.
Case: 15-10627 Date Filed: 04/01/2015 Page: 35 of 38
Dated: April 1, 2015
Kate Comerford ToddWarren PostmanU.S. CHAMBER LITIGATION
CENTER, INC.1615 H Street, N.W.Washington, DC 20062(202) 463-5337
Respectfully submitted,
/s/ Evan M. TagerEvan M. TagerArchis A. ParasharamiDaniel E. JonesMAYER BROWN LLP1999 K Street, N.W.Washington, DC 20006(202) 263-3000
Counsel for Amicus Curiae the Chamber of Commerceof the United States of America
Case: 15-10627 Date Filed: 04/01/2015 Page: 36 of 38
CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rule of Appellate Procedure 29(c)(7), the
undersigned counsel for the amicus curiae certifies that this brief:
(i) complies with the type-volume limitation of Appellate Rule
29(d) because it contains 6,019 words, including footnotes and excluding
the parts of the brief exempted by Appellate Rule 32(a)(7)(B)(iii); and
(ii) complies with the typeface requirements of Appellate Rule
32(a)(5) and the type style requirements of Rule 32(a)(6) because it has
been prepared using Microsoft Office Word and is set in Century
Schoolbook font in a size equivalent to 14 points or larger.
/s/ Evan M. TagerCounsel for Amicus Curiae
Case: 15-10627 Date Filed: 04/01/2015 Page: 37 of 38
CERTIFICATE OF SERVICE
I certify that that on April 1, 2015, the foregoing brief was served
electronically via the Court’s CM/ECF system upon all counsel of
record.
/s/ Evan M. TagerCounsel for Amicus Curiae
Case: 15-10627 Date Filed: 04/01/2015 Page: 38 of 38